Monetary policy and interest rates: evidence from Mexico

Using the recent experience of Mexico under a flexible exchange-rate regime and under an inflation-targeting framework, this paper examines the extent to which monetary policy has performed the role of nominal anchor for the Mexican economy. The paper identifies a set of variables together with a mo...

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Bibliographic Details
Published in:The North American journal of economics and finance 2003-12, Vol.14 (3), p.357-379
Main Author: Torres, Alberto
Format: Article
Language:English
Subjects:
Flexible exchange rates
Floating exchange rates
Inflation
Inflation targeting
Interest rates
Monetary policy
Monetary policy rules
Studies
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Summary:Using the recent experience of Mexico under a flexible exchange-rate regime and under an inflation-targeting framework, this paper examines the extent to which monetary policy has performed the role of nominal anchor for the Mexican economy. The paper identifies a set of variables together with a monetary policy rule, which offer a good approximation to the process through which interest rates are determined. The evidence suggests that recent monetary policy in Mexico has been consistent with inflation-targeting principles and has become the nominal anchor for the economy.
ISSN:1062-9408
1879-0860
DOI:10.1016/j.najef.2003.08.001